A recently approved makeover of TVA’s renewable energy program is aimed at developing green power while keeping prices down for its customers, officials with the public utility say.

Industry observers, however, believe the federal power provider may be painting lipstick on a pig.

Among the measures approved by TVA’s board at its recent quarterly meeting is to transition the Generation Partners pilot program to permanent status under the new name Green Power Providers. The program particularly targets development of small wind, solar, biomass or hydro generation systems, offering an up-front incentive as well as above-retail rates for power purchased from qualifying customers.

TVA also extended the customer contract length for the program from 10 to 20 years – although TVA will pay retail-only rates without the premium for the second half of the contract.

Extending the contract period will help provide more stability in the market and allow customers to more easily finance the systems, said John Trawick, TVA senior vice president of commercial operations and pricing.

“Now the customer knows exactly what their rate is going to be,” he said.

TVA also is planning to add perks for solar installations under its Renewable Standard Offer program for larger power generation projects. Under the changes, developers who meet a checklist of requirements, including purchasing systems manufactured in the state and contracting the services of local installers, would be paid a bonus for their power. TVA is considering a 6-cent-per-kilowatt addition to the current rate system.

Over the past 18 months, TVA has been culling the size of projects that qualify for more premium rates under Green Power Providers because of an overwhelming number of applications for such projects, according to agency officials.

However, solar developers have complained that the new program for larger systems doesn’t offer enough pay-back to warrant the investment and charged that TVA fails to nurture a technology that could serve as an important component of economic development in the state. A new Hemlock Semiconductor plant in Clarksville currently is producing raw silicon out of which solar cells are made while another silicon production facility operated by Wacker Chemical is under construction in Cleveland, Tenn. Other Tennessee facilities manufacture panels and additional materials for photovoltaic systems.

“It was a way to spur that additional solar development in that larger size targeted toward making investment in the Tennessee Valley,” Trawick said. TVA still is working out details of the program, called Solar Solutions, which will be launched in January.

The programmatic changes are taking place in the context of a reorganization to bring all of TVA’s renewable purchase programs under its EnergyRight Solutions brand.

“Now we’ll have one place that all of the external stakeholders will come to interface on those issues,” Trawick said.

While these are positive steps for TVA’s renewable power production efforts, concerns remain among green power advocates and those within the solar industry that TVA is failing to recognize both the potential and the pitfalls of the up-and-coming sector.

While the reorganization effort and program changes are a step in the right direction, other changes announced at the board meeting are more worrisome, said Stephen Smith, executive director of the Southern Alliance for Clean Energy in Knoxville, who attended the recent board meeting.

For example, TVA officials indicated that over the next few years they are looking to scale back the rates paid for customer-generated renewable power as part of the Green Power Providers program. Customers currently receive the retail rate plus 12 cents per kilowatt-hour of electricity they produce. Any reduced rates would apply only to new program applicants.

Explaining that the cost of solar technologies is declining to the point that it will soon be as cheap to build as more traditional power sources, Trawick said TVA is considering “slowly phasing down to almost no premium by 2016.” He said TVA will analyze the market on an annual basis to determine what the cutbacks should be.

Smith disagreed with this assessment, saying that while photovoltaics are indeed coming down in price – particularly larger systems – it will take much longer for them to truly equal the price of traditional power, particularly for the type of customer targeted by the program.

“There was very little detail, very little explanation” about how the agency will determine when solar technology has hit “grid parity,” Smith said.

“I don’t think anybody in the solar industry is saying if prices are going down you have to offer the same exact incentive,” he said. “I think what’s missing is figur(ing) out what is the right mix.”

Ultimately, Smith said, TVA board members need to weigh in on a strategy for the public utility’s renewable power portfolio.

“I think there is a desire at the board level to do more with renewable energy,” Smith said. “I have a feeling that you’re going to see more robust discussion on this over the course of the next year.”

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